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Payments to Foreign Nationals and Entities

Effective Date: September 24, 2008

Rev. March 2, 2009

POLICY SUMMARY

Nonresident aliens doing business with the University are required to provide a completed and signed Form W-8 or Form 8233 along with evidence of immigration status.  Foreign entities doing business with the University are required to provide a completed and signed Form W-8.  These forms must be received before payment will be issued to such individuals or entities.     

Depending on the type of payment, all payments made to or on behalf of a nonresident alien or foreign entity are generally subject to income tax withholding unless specifically exempted, either by U.S. tax law or an income tax treaty.  Generally, payments not exempt from withholding, are subject to 30% federal income tax withholding, in accordance with Internal Revenue Service (IRS) regulations.  To claim an exemption from tax withholding under an income tax treaty, the payee must submit the appropriate exemption request form.

POLICY STATEMENT

This policy establishes the responsibilities, controls, and procedures for payments to foreign individuals and entities related to ensuring compliance with IRS and immigration regulations. Under federal regulations in IRS Code Section 1441-1446, Columbia University, as Withholding Agent, is responsible for ensuring compliance with immigration regulations, proper tax withholding, and preparing, reviewing and distributing appropriate Form 1042 Information Returns for foreign individuals and/or entities.

This policy ensures these payees' immigration information is properly obtained and reviewed to confirm that payments can be made.  In addition, this policy ensures proper tax information is obtained for all foreign nationals who are not U.S. residents and/or domestic entities to certify their status to assess tax treatment and ensure proper tax withholding.

REASON FOR POLICY

This policy:

  • Provides guidance with respect to payments to individuals who are neither citizens nor permanent residents of the United States and entities not organized in the United States;
  • Ensures compliance with United States Citizenship and Immigration Services (USCIS) rules regarding the types of payments that can be made to an individual based on his or her immigration status; and
  • Ensures compliance with the Internal Revenue Service (IRS) tax withholding and reporting rules. 

PRIMARY POLICY TO WHICH THIS POLICY RESPONDS

This policy primarily responds to the regulations of the IRS, which govern the taxation of payments to foreign nationals and foreign entities.  It also responds to the regulations set by the USCIS governing which foreign visitors, scholars and students may receive payments.  Lastly, the policy responds to the rules established by the agencies and entities that sponsor research at Columbia and the federal and state laws that govern not-for-profit organizations. 

RESPONSIBLE UNIVERSITY OFFICE & OFFICER

Procurement Services, Accounts Payable Division; Vice President of Procurement

REVISION HISTORY

None

WHO IS GOVERNED BY THIS POLICY

All Columbia University employees and departments that seek to engage, pay or reimburse a foreign national or foreign corporation. 

WHO SHOULD KNOW THIS POLICY

  • Senior Financial or Business Officers
  • Chairs of Departments, Directors of Institutes and Centers
  • Department Administrators
  • Divisional Administrators with financial responsibility and oversight
  • Program Directors
  • Faculty
  • Junior Officers and Non-Officers with financial responsibility and oversight
  • Administrative staff with Accounts Payable responsibility

EXCLUSIONS & SPECIAL SITUATIONS

The University cannot provide tax advice to individuals; payees should contact their personal tax advisor with any questions or concerns.

This policy does not refer to payment made to individuals or entities performing services for the University in the capacity of an employee.  Additionally, in order to ensure compliance with IRS regulations, the University will not reimburse an employee for a payment made to an individual or entity (including students) who provided services to the University.  Please reference the Business Expense Policy in the Administrative Policy Library for additional information.

This policy does not include guidance for lawful Permanent Residents of the United States. A resident alien for tax purposes is defined by the IRS as:

  • A person who possesses a "green card", evidence of lawful permanent residency in the United States. that  allows an alien to work legally, travel abroad and return, bring in a spouse and/or children, and become eligible for citizenship, or
  • Someone who has satisfied the substantial presence test

A resident alien is subject to the same tax withholding and reporting requirements as a U.S. citizen, including taxation on worldwide income.

This policy also does not include guidance for U.S. citizens and lawful Permanent Residents or any other individual working outside the United States on behalf of the University.

POLICY TEXT

For full policy text, please click link in right-hand menu.